) reported an adjusted income from continuing operations (excluding
one-time items) of $177 million or $1.28 per share in the second
quarter of 2012 compared to a net income of $163 million or $1.13
per share in the previous year quarter and $168 million or $1.20
per share in the first quarter of 2012. Fiserv's earnings
surpassed the Zacks Consensus Estimate of $1.26 per share
Adjusted revenues (excluding output solutions postage
reimbursements) for Fiserv amounted to $1.03 billion, rising 2.6%
year over year but remaining flat sequentially. Revenue growth
across the company's debit, account processing and lending
businesses was the primary cause for the annual rise in adjusted
revenues for the quarter. This, however, missed the Zacks Consensus
Estimate of $1.1 billion.
The Payments and Industry Products segment reported adjusted
revenues of $538 million, up 4.1% year over year but down 1.3%
sequentially. The Wachovia bill payment de-conversion, software
license revenue and Durbin effect on the company's biller business
proved detrimental to the company's total revenue stream during the
quarter. However, strong sales across card services, output
solutions largely mitigated the damaging effect.
The Financial Institution Services segment revenues came in at
$502 million, up 1% and 0.2% sequentially, led by the company's
Account Processing and Lending business sales which were partially
offset by weakened license and termination fee revenues.
The Corporate and Other segment recorded a loss of $11 million,
remaining flat year over year and reducing 8.3% sequentially.
Adjusted operating margin (excluding mergers, severance costs
and amortization of acquisition-related intangible assets) in the
quarter came to 29.3% which remained flat year over year but
increased by 60 basis points from the last quarter. The quarterly
rise was attributable to the company's operational efficiencies
achieved during the first half of 2012.
The Payments and Industry Products' adjusted operating margin
was 29.8% compared to 31.7% in the year-ago quarter and 29.5% in
the last quarter. The implementation cost, the coalition of
CashEdge and the adverse impact from bill payment deconversions
reduced the segment's margin from the prior year quarter.
The Financial Institution Services segment's operating margin
came in at 32.5%, rising from 30.8% in the previous year quarter
and also surging from 30.2% in the previous quarter. Growth across
the segments' all businesses was the primary cause for the rise in
the margins for the quarter. The company's augmented operational
efficiency also positively impacted the quarter's margins.
The Corporate and Other segment witnessed an operating loss of
$21 million versus $23 million in the prior year quarter and $16
million in the previous quarter. The sequential rise in the
operating loss was caused by the company's marketing expenses which
include cost related to client conference.
Balance Sheet and Cash Flow
As of June 30, 2012, the company had cash and cash equivalents
of $302 million, decreasing from $311 million at the end of the
previous quarter. In addition, net trade accounts receivable came
in for $606 million, deteriorating from $650 million at the end of
the previous quarter. Long-term debt remained somewhat consistent
at $3.2 billion compared to the previous quarter.
Net cash provided by operating activities amounted to $385
million in the first two quarters of 2012 compared to $418 million
in the previous year period. Capital expenditures incurred were
$102 million which remains flat year over year.
During the second quarter of 2012, Fiserv repurchased 2.1
million shares worth $143 million, bringing the total to 5.8
million shares for $388 million during the first six months of
2012. Under the existing share repurchase authorization program,
Fiserv has about 9 million shares remaining for repurchase.
For the full year 2012, management projects an annual adjusted
revenue growth of 4% - 6% and adjusted internal revenue growth of
3.0% - 4.5%. The adjusted EPS is likely to be in the range of $5.08
- $5.20, representing a yearly growth of 11% - 14%.
The adjusted operating margin is expected to increase annually
by 30 basis points to 60 basis points for 2012. Free cash flow
growth is anticipated to be within 8% - 12%. Effective tax rate is
expected to be 37% in the second-half of 2012.
FISERV INC (FISV): Free Stock Analysis Report
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